The Euro and fiscal timebombs

The Euro crisis and the fiscal cliff are such serious threats they should be considered time bombs.  For that reason I have been trying hard not to even read about them let alone think and write. Well, anyways, here goes.

There are two parts to the problems – the physical and the financial.

The physical is that the resource base is in trouble.  We have used up the most easily extracted resources.  Those which are left are difficult to extract and require a lot of energy – energy which was previously used for other economic activity.

As most of these resources, especially energy, are non-renewable there is bound to be a negative impact on our lives.  Yes, I know we can recycle some items and there are several sources of renewable energy, but so for there is not a lot of evidence that either of these will save us.

The impact of resources will probably be a slow steady decline.  For those people hit be natural disasters recovery will be slow and difficult.

The impact of the financial crisis will likely be a much wilder ride.

The source of the financial crisis is the fractional reserve way of creating money.  Money is created when the banks make loans.  Thus most of our money supply is based on debt and the fact interest is being charged on this debt means there is never enough money in existence to repay all the debts.  (For a more detailed explanation of how money is created and the problems, please see the essay LETS go to market: dealing with the financial crisis on this weblog.)  The effect is that our money supply is a Ponzi scheme which is likely to collapse at any time. And it has in the past.  We could say we are living in a house of cards.

At this point in the crisis the question is whose standard of living is going to be hurt.  So far the answer is “everybody but me.”  Thus we have demands for austerity which impacts those with less income, demands for stimulus which means inflation which impacts those with savings, and protests in the streets.  If or rather when the crash happens a lot of people are going to lose their jobs, savings or fortunes.

Just thinking about all this makes me depressed.  At this time I want to spend the rest of my life in the  wood shop  or taking the dog for walks in the forest.  However, it won’t be long before the urge to write resurfaces.

Last week I received in the mail a little statue of the Laughing Buddha.  One of his functions is to tell us to laugh in spite of all the suffering in this world because there is also a lot of joy and happiness.

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